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Fake Diplomas, Real Cash: Pakistani Company AxactReaps
MillionsPhoto
Axact, which has its headquarters in Karachi, Pakistan,
ostensibly operates as a software company.Credit Sara Farid for The
New York Times
Seen from the Internet, it is a vast education empire: hundreds
of universities andhigh schools, with elegant names and smiling
professors at sun-dappled Americancampuses.
Their websites, glossy and assured, offer online degrees in
dozens of disciplines, likenursing and civil engineering. There are
glowing endorsements on the CNN iReportwebsite, enthusiastic video
testimonials, and State Department authenticationcertificates
bearing the signature of Secretary of State John Kerry.
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We host one of the most renowned faculty in the world, boasts a
woman introducedin one promotional video as the head of a law
school. Come be a part of NewfordUniversity to soar the sky of
excellence.
Yet on closer examination, this picture shimmers like a mirage.
The news reports arefabricated. The professors are paid actors. The
university campuses exist only asstock photos on computer servers.
The degrees have no true accreditation.
In fact, very little in this virtual academic realm, appearing
to span at least 370websites, is real except for the tens of
millions of dollars in estimated revenue itgleans each year from
many thousands of people around the world, all paid to asecretive
Pakistani software company.
Photo
Axact makes tens of millions of dollars annually by oering
diplomas and degrees online through hundreds
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of fictitious schools. Fake accreditation bodies and
testimonials lend the schools an air of credibility. Butwhen
customers call, they are talking to Axact sales clerks in
Karachi.
That company, Axact, operates from the port city of Karachi,
where it employs over2,000 people and calls itself Pakistans
largest software exporter, with Silicon Valley-style employee perks
like a swimming pool and yacht.
Axact does sell some software applications. But according to
former insiders,company records and a detailed analysis of its
websites, Axacts main business hasbeen to take the centuries-old
scam of selling fake academic degrees and turn it intoan
Internet-era scheme on a global scale.
As interest in online education is booming, the company is
aggressively positioningits school and portal websites to appear
prominently in online searches, luring inpotential international
customers.
At Axacts headquarters, former employees say, telephone sales
agents work in shiftsaround the clock. Sometimes they cater to
customers who clearly understand thatthey are buying a shady
instant degree for money. But often the agents manipulatethose
seeking a real education, pushing them to enroll for coursework
that nevermaterializes, or assuring them that their life
experiences are enough to earn them adiploma.
To boost profits, the sales agents often follow up with
elaborate ruses, includingimpersonating American government
officials, to persuade customers to buyexpensive certifications or
authentication documents.
Revenues, estimated by former employees and fraud experts at
several milliondollars per month, are cycled through a network of
offshore companies. All the while,Axacts role as the owner of this
fake education empire remains obscured by proxyInternet services,
combative legal tactics and a chronic lack of regulation in
Pakistan.
Customers think its a university, but its not, said Yasir
Jamshaid, a quality controlofficial who left Axact in October. Its
all about the money.
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Axacts response to repeated requests for interviews over the
past week, and to a listof detailed questions submitted to its
leadership on Thursday, was a letter from itslawyers to The New
York Times on Saturday. In the letter, it issued a blanket
denial,accusing a Times reporter of coming to our client with
half-cooked stories andconspiracy theories.
In an interview in November 2013 about Pakistans media sector,
Axacts founderand chief executive, Shoaib Ahmed Shaikh, described
Axact as an I.T. and I.T.network services company that serves small
and medium-sized businesses. On adaily basis we make thousands of
projects. Theres a long client list, he said, butdeclined to name
those clients.
The accounts by former employees are supported by internal
company records andcourt documents reviewed by The New York Times.
The Times also analyzed morethan 370 websites including school
sites, but also a supporting body of searchportals, fake
accreditation bodies, recruitment agencies, language schools and
even alaw firm that bear Axacts digital fingerprints.
In academia, diploma mills have long been seen as a nuisance.
But the proliferationof Internet-based degree schemes has raised
concerns about their possible use inimmigration fraud, and about
dangers they may pose to public safety and legalsystems. In 2007,
for example, a British court jailed Gene Morrison, a fake
policecriminologist who claimed to have degree certificates from
the Axact-ownedRochville University, among other places.
Little of this is known in Pakistan, where Axact has dodged
questions about itsdiploma business and has portrayed itself as a
roaring success and model corporatecitizen.
Winning and caring is the motto of Mr. Shaikh, who claims to
donate 65 percent ofAxacts revenues to charity, and last year
announced plans for a program to educate10 million Pakistani
children by 2019.
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More immediately, he is working to become Pakistans most
influential media mogul.For almost two years now, Axact has been
building a broadcast studio andaggressively recruiting prominent
journalists for Bol, a television and newspapergroup scheduled to
start this year.
Photo
A screengrab taken from the website Columbiana University. This
and other Axact sites have toll-freeAmerican contact numbers and
calculatedly familiar-sounding names.
Just how this ambitious venture is being funded is a subject of
considerablespeculation in Pakistan. Axact has filed several
pending lawsuits, and Mr. Shaikh hasissued vigorous public denials,
to reject accusations by media competitors that thecompany is being
supported by the Pakistani military or organized crime. What
isclear, given the scope of Axacts diploma operation, is that fake
degrees are likelyproviding financial fuel for the new media
business.
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Hands down, this is probably the largest operation weve ever
seen, said AllenEzell, a retired F.B.I. agent and author of a book
on diploma mills who has beeninvestigating Axact. Its a
breathtaking scam.
Building a Web
At first glance, Axacts universities and high schools are linked
only by superficialsimilarities: slick websites, toll-free American
contact numbers and calculatedlyfamiliar-sounding names, like
Barkley, Columbiana and Mount Lincoln.
But other clues signal common ownership. Many sites link to the
same fictitiousaccreditation bodies and have identical graphics,
such as a floating green windowwith an image of a headset-wearing
woman who invites customers to chat.
There are technical commonalities, too: identical blocks of
customized coding, andthe fact that a vast majority route their
traffic through two computer servers run bycompanies registered in
Cyprus and Latvia.
Five former employees confirmed many of these sites as in-house
creations of Axact,where executives treat the online schools as
lucrative brands to be meticulouslycreated and forcefully marketed,
frequently through deception.
The professors and bubbly students in promotional videos are
actors, according toformer employees, and some of the stand-ins
feature repeatedly in ads for differentschools.
The sources described how employees would plant fictitious
reports about Axactuniversities on iReport, a section of the CNN
website for citizen journalism. AlthoughCNN stresses that it has
not verified the reports, Axact uses the CNN logo as apublicity
tool on many of its sites.
Social media adds a further patina of legitimacy. LinkedIn
contains profiles forpurported faculty members of Axact
universities, like Christina Gardener, describedas a senior
consultant at Hillford University and a former vice president
at
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Southwestern Energy, a publicly listed company in Houston. In an
email, aSouthwestern spokeswoman said the company had no record of
an employee withthat name.
The heart of Axacts business, however, is the sales team young
and well-educatedPakistanis, fluent in English or Arabic, who work
the phones with customers whohave been drawn in by the websites.
They offer everything from high school diplomasfor about $350, to
doctoral degrees for $4,000 and above.
Its a very sales-oriented business, said a former employee who,
like several others,spoke on the condition of anonymity because he
feared legal action by Axact.
A new customer is just the start. To meet their monthly targets,
Axact sales agentsare schooled in tough tactics known as upselling,
according to former employees.Sometimes they cold-call prospective
students, pretending to be corporaterecruitment agents with a
lucrative job offer but only if the student buys an
onlinecourse.
A more lucrative form of upselling involves impersonating
American governmentofficials who wheedle or bully customers into
buying State Departmentauthentication certificates signed by
Secretary Kerry.
Photo
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Axact employees often follow up aggressively with previous
customers, pushing them to buy more. Somepose as American ocials,
badgering clients to spend thousands of dollars on State
Departmentauthentication letters. Payments are funneled through
oshore firms.
Such certificates, which help a degree to be recognized abroad,
can be lawfullypurchased in the United States for less than $100.
But in Middle Eastern countries,Axact officials sell the documents
some of them forged, others secured under falsepretenses for
thousands of dollars each.
They would threaten the customers, telling them that their
degrees would be uselessif they didnt pay up, said a former sales
agent who left Axact in 2013.
Axact tailors its websites to appeal to customers in its
principal markets, including
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the United States and oil-rich Persian Gulf countries. One Saudi
man spent over$400,000 on fake degrees and associated certificates,
said Mr. Jamshaid, the formeremployee.
Usually the sums are less startling, but still substantial.
One Egyptian man paid $12,000 last year for a doctorate in
engineering technologyfrom Nixon University and a certificate
signed by Mr. Kerry. He acknowledgedbreaking ethical boundaries:
His professional background was in advertising, he saidin a phone
interview, speaking on the condition of anonymity to avoid
potential legaltrouble.
But he was certain the documents were real. I really thought
this was coming fromAmerica, he said. It had so many foreigner
stamps. It was so impressive.
Real-Life Troubles
Many customers of degree operations, hoping to secure a
promotion or pad theirrsum, are clearly aware that they are buying
the educational equivalent of aknockoff Rolex. Some have been
caught.
In the United States, one federal prosecution in 2008 revealed
that 350 federalemployees, including officials at the departments
of State and Justice, heldqualifications from a non-Axact-related
diploma mill operation based in WashingtonState.
Some Axact-owned school websites have previously made the news
as beingfraudulent, though without the companys ownership role
being discovered. In 2013,for instance, Drew Johansen, a former
Olympic swim coach, was identified in a newsreport as a graduate of
Axacts bogus Rochville University.
The effects have sometimes been deeply disruptive. In Britain,
the police had to re-examine 700 cases that Mr. Morrison, the
falsely credentialed police criminologistand Rochville graduate,
had worked on. It looked easier than going to a real
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Photo
Shoaib Ahmed Shaikh, the founder of Axact, in animage taken from
social media.
university, Mr. Morrison said during his 2007 trial.
In the Middle East, Axact has sold aeronautical degrees to
airline employees, andmedical degrees to hospital workers. One
nurse at a large hospital in Abu Dhabi,United Arab Emirates,
admitted to spending $60,000 on an Axact-issued medicaldegree to
secure a promotion.
But there is also evidence that many Axact customers are dupes,
lured by thepromise of a real online education.
Elizabeth Lauber, a bakery worker from Bay City, Mich., had been
home-schooled,but needed a high school diploma to enroll in
college. In 2006, she called BelfordHigh School, which had her pay
$249 and take a 20-question knowledge test online.
Weeks later, while waiting for thepromised coursework, Ms.
Lauber wassurprised to receive a diploma in the mail.But when she
tried to use the certificate ata local college, an official said it
wasuseless. I was so angry, she said byphone.
Last May, Mohan, a junior accountant at aconstruction firm in
Abu Dhabi, paid$3,300 for what he believed was going tobe an
18-month online masters program
in business administration at the Axact-owned Grant Town
University.
A sales agent assured Mohan, a 39-year-old Indian citizen who
asked to be identifiedonly by part of his name, of a quality
education. Instead, he received a cheap tabletcomputer in the mail
it featured a school logo but no education applications
orcoursework followed by a series of insistent demands for more
money.
When a phone caller who identified himself as an American
Embassy official railed at
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Mohan for his lack of an English-language qualification, he
agreed to pay $7,500 tothe Global Institute of English Language
Training Certification, an Axact-runwebsite.
In a second call weeks later, the man pressed Mohan to buy a
State Departmentauthentication certificate signed by Mr. Kerry.
Mohan charged $7,500 more to hiscredit card.
Then in September a different man called, this time claiming to
represent the UnitedArab Emirates government. If Mohan failed to
legalize his degree locally, the manwarned, he faced possible
deportation. Panicking, Mohan spoke to his sales agent atAxact and
agreed to pay $18,000 in installments.
By October, he was $30,000 in debt and sinking into depression.
He had stoppedsending money to his parents in India, and hid his
worries from his wife, who hadjust given birth.
She kept asking why I was so tense, said Mohan during a recent
interview near hishome in Abu Dhabi. But I couldnt say it to
anyone.
Chasing Bill Gates
In Pakistan, Mr. Shaikh, Axacts chief executive, portrays
himself as a self-madetycoon of sweeping ambition with a passion
for charity.
Growing up in a one-room house, he said in a speech posted on
the companyswebsite, his goal was to become the richest man on the
planet, even richer than BillGates. At gala company events he
describes Axact, which he founded in 1997, as aglobal software
leader. His corporate logo a circular design with a soaring eagle
bears a striking resemblance to the American presidential seal.
Unusual for a software entrepreneur, Mr. Shaikh does not
habitually use email or acellphone, said several people recruited
to his new station, Bol.
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But his ambition is undimmed: Last year he announced plans for
Gal Axact, afuturistic headquarters building with its own monorail
system and space for 20,000employees. His philanthropic vision,
meanwhile, has a populist streak that resonateswith many Pakistanis
frustrations with their government.
As well as promising to educate 10 million children, Mr. Shaikh
last year started aproject to help resolve small civil disputes a
pointed snub to the countrys scleroticjustice system and vowed to
pump billions of dollars into Pakistans economy.
Photo
Barkley University claims that its degrees are recognized all
over the world.
There is no power in the universe that can prevent us from
realizing this dream, hedeclared in the speech.
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But some employees, despite the good salaries and perks they
enjoyed, becamedisillusioned by the true nature of Axacts
business.
During three months working in the internal audit department
last year, monitoringcustomer phone calls, Mr. Jamshaid grew
dismayed by what he heard: customersbeing cajoled into spending
tens of thousands of dollars, and tearful demands forrefunds that
were refused.
I had a gut feeling that it was not right, he said.
In October, Mr. Jamshaid quit Axact and moved to the United Arab
Emirates, takingwith him internal records of 22 individual customer
payments totaling over$600,000.
Mr. Jamshaid has since contacted most of those customers,
offering to use hisknowledge of Axacts internal protocols to obtain
refunds. Several spurned hisapproach, seeing it as a fresh effort
to defraud them. But a few, including Mohan,accepted his offer.
After weeks of fraught negotiations, Axact refunded Mohan
$31,300 last fall.
The Indian accountant found some satisfaction, but mostly felt
chastened andembarrassed.
I was a fool, he said, shaking his head. It could have ruined
me.
Deception and Threats
Axacts role in the diploma mill industry was nearly exposed in
2009 when anAmerican woman in Michigan, angry that her online high
school diploma had proveduseless, sued two Axact-owned websites,
Belford High School and Belford University.
The case quickly expanded into a class-action lawsuit with an
estimated 30,000American claimants. Their lawyer, Thomas H.
Howlett, said in an interview that hefound hundreds of stories of
people who have been genuinely tricked, including
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Ms. Lauber, who joined the suit after it was established.
But instead of Axact, the defendant who stepped forward was
Salem Kureshi, aPakistani who claimed to be running the websites
from his apartment. Over threeyears of hearings, his only
appearance was in a video deposition from a dimly litroom in
Karachi, during which he was barely identifiable. An associate who
alsotestified by video, under the name John Smith, wore
sunglasses.
Mr. Kureshis legal fees of over $400,000 were paid to his
American lawyers throughcash transfers from different currency
exchange stores in Dubai, court documentsshow. Recently a reporter
was unable to find his given address in Karachi.
Photo
A broadcast studio at Bol, a television and newspaper group
owned by Axact that is scheduled to start thisyear. Credit Sara
Farid for The New York Times
We were dealing with an elusive and illusory defendant, said Mr.
Howlett, thelawyer for the plaintiffs.
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In his testimony, Mr. Kureshi denied any links to Axact, even
though mailboxesoperated by the Belford schools listed the companys
headquarters as theirforwarding address.
The lawsuit ended in 2012 when a federal judge ordered Mr.
Kureshi and Belford topay $22.7 million in damages. None of the
damages have been paid, Mr. Howlettsaid.
Today, Belford is still open for business, using a slightly
different website address.Former Axact employees say that during
their inductions into the company, the twoschools were held out as
prized brands.
Axact does have regular software activities, mainly in website
design and smartphoneapplications, former employees say. Another
business unit, employing about 100people, writes term papers on
demand for college students.
But the employees say those units are outstripped by its diploma
business, which asfar back as 2006 was already earning Axact around
$4,000 a day, according to aformer software engineer who helped
build several sites. Current revenues are atleast 30 times higher,
by several estimates, and are funneled through companiesregistered
in places like Dubai, Belize and the British Virgin Islands.
Axact has brandished legal threats to dissuade reporters, rivals
and critics. Underpressure from Axact, a major British paper, The
Mail on Sunday, withdrew an articlefrom the Internet in 2006.
Later, using an apparently fictitious law firm, thecompany faced
down a consumer rights group in Botswana that had criticized
Axact-run Headway University.
It has also petitioned a court in the United States, bringing a
lawsuit in 2007 againstan American company that is a competitor in
the essay-writing business, StudentNetwork Resources, and that had
called Axact a foreign scam site. The Americancompany countersued
and was awarded $700,000, but no damages have been paid,the
companys lawyer said.
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In his interview with The New York Times in 2013, Axacts chief
executive, Mr.Shaikh, acknowledged that the company had faced
criticism in the media and on theInternet in Britain, the United
States and Pakistan, and noted that Axact hadfrequently issued a
robust legal response.
We have picked up everything, we have gone to the courts, he
said. Lies cannotflourish like that.
Mr. Shaikh said that the money for Axacts new media venture,
Bol, would comefrom our own funds.
With so much money at stake, and such considerable effort to
shield its interests, onemystery is why Axact is ready to risk it
all on a high-profile foray into the mediabusiness. Bol has already
caused a stir in Pakistan by poaching star talent from
rivalorganizations, often by offering unusually high salaries.
Mr. Shaikh says he is motivated by patriotism: Bol will show the
positive andaccurate image of Pakistan, he said last year. He may
also be betting that the newoperation will buy him influence and
political sway.
In any event, Axacts business model faces few threats within
Pakistan, where it doesnot promote its degrees.
When reporters for The Times contacted 12 Axact-run education
websites on Friday,asking about their relationship to Axact and the
Karachi office, sales representativesvariously claimed to be based
in the United States, denied any connection to Axact orhung up
immediately.
This is a university, my friend, said one representative when
asked about Axact. Ihave no idea what youre talking about.